PRECIOUS-Gold dips as market awaits cues from Fed meeting

Reuters Staff

3 Min Read

* Gold touches weakest level since June 2
* Palladium edges away from 16-year high hit last week
* Silver hits weakest since May 19
(Recasts, adds details, updates prices)
By Maytaal Angel
LONDON, June 13 (Reuters) - Gold dipped on Tuesday on
technical selling, although losses were limited as most
investors stayed on the sidelines ahead of a U.S. Federal
Reserve meeting that should provide signals on the pace of
future monetary tightening.
The Fed is widely expected to raise interest rates when it
concludes its meeting on Wednesday, although investors will
focus on any new hints on the pace of hikes this year and its
assessment of the economy and inflation.
"Obviously ahead of the meeting people aren't building
significant positions ... If anything, they're expecting a
dovish Fed because recent (U.S.) economic data has been weak,"
said Fawad Razaqzada, analyst at FOREX.com.
A lower-than-expected pace of rate hikes would weigh on the
dollar, making dollar-priced gold cheaper for non-U.S.
investors.
Spot gold dipped 0.3 percent to $1,261.88 per ounce
at 1229 GMT, extending losses into a fifth session, after
hitting a session low of $1,259.16, its weakest since June 2.
U.S. gold futures for August delivery dropped 0.4
percent to $1,264.10.
The U.S. dollar slipped ahead of the Fed meeting, with
investors also awaiting details from the Fed on its plans to
shrink $4.5 trillion dollars of assets it amassed to nurse the
economic recovery.
"There have been no major developments recently to give the
safe-haven metal additional support. This has allowed the
shorter-term futures traders to put downside pressure on the
market via profit taking," said KITCO Metals Inc in a note.
U.S. producer prices were unchanged in May as energy costs
recorded their biggest decline in more than a year, suggesting
inflation pressures were easing after rising at the start of the
year. Weakening inflation could limit the scope for further
monetary policy tightening this year.
Among other precious metals, palladium edged away
from a 16-year high hit on Friday, and was last down 1.7 percent
at $885 an ounce.
"We see no justification for the strong palladium price,
especially as the Chinese market – the second key automotive
market for palladium – is faltering," Commerzbank said.
The Commerzbank note, which cited the China Association of
Automobile Manufacturers, said 1.75 million cars were sold in
China in May, which was 2.6 percent down year-on-year.
Silver slipped 1.2 percent to $16.72 per ounce,
having earlier hit $16.68, its lowest since May 19. In the
previous session, it slid 1.4 percent to its biggest one-day
percentage decline since May 18.
Platinum fell 1.1 percent to $926.24 per ounce.
(Additional reporting by Nithin ThomasPrasad; Editing by Edmund
Blair and David Evans)